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Moving Toward Better Outcomes and CM Return on Investment

Continuous changes in regulations and reimbursement structures necessitated adjustments in hospital operations and particularly in care/case management (CM) operations toward more effective and well-documented care. However, the speed of changes in the health care industry and that of adjustments in operational processes never seem to go at the same pace. It is almost like expecting a tsunami after an earthquake occurs in the ocean. No one quite knows when or where it will hit.

Another drawback to that discrepancy is that the pace of change is inconsistent amongst the different areas that are affected by it. In this article, the focus is on Medicare changes and its tsunami-like impact on CM over the last few years. These changes, along with ensuing changes by other payers modeling Medicare’s payment model, made almost every facility rethink its approaches to care delivery and documentation.

First, a Piece of History

After many years in the making, the Social Security Act of 1965 became a reality so that access to care challenges and other evolving needs could be addressed. This resulted in Title 18 (Medicare) and 19 (Medicaid) benefits along with programs like maternal and infant care under Title 5, and community centers and Head Start programs under the Economic and Opportunity Act (Richmond and Fein, 1995). Regardless of the purpose at the time, these programs triggered upward spiraling of costs and a for-profit system that rewarded quantity services instead of quality services. As some would call it, this enactment initiated the “health care mess” that we wade in today.

In the 1980s, the advent of managed care, explosive growth of employer-sponsored health insurance, and the emphasis on disease management and CM programs as measures to control unnecessary utilization of health services demonstrated cost-effective measures. However, national expenditures on health continued to rise, hitting up to 16 percent of the gross domestic product (GDP), almost double what it was in 1980. Further, public funding inclusive of Medicare, Medicaid, and SCHIP paid for 45 percent of all health care costs which suggested a continued rise in spending. According to Sered and Fernandopulle (2005), the Medicare program of federal funding is the largest public funding source, and Medicaid is the second largest. In many ways, Medicare rules set the stage for other payers to follow.   

The two most influential Medicare initiatives that changed CM were Medicare prospective payment system (PPS) and diagnostic related groups (DRGs), currently MS-DRGs.

Using prospective payment systems of the 1980s under DRGs was Medicare’s way of controlling unnecessary utilization. Following many years of hospitals’ efforts to learn the ways of tracking principal and secondary diagnoses as well as documenting complications and chronic conditions, DRGs changed into Medicare Severity DRGs, or MS-DRGs, instead under the Final Ruling of Inpatient Prospective Payment System (IPPS) of 2008.

Medicare Severity DRGs brought changes not only in the number of groupings, which was changed from 538 to 745, but also in relative weights (RW)—what is considered noncontributory chronic condition versus complex chronic care or major co-morbid condition that impacted the weight of the DRG and consequent payment. It also affected what is an acceptable inpatient versus outpatient procedure for reimbursement, and additionally what is considered a hospital acquired condition (HAC). This determined what is not reimbursable versus what was present on admission.

Payment Errors and Quality Reports

In an effort to control health care spending, CMS contracted TMF Health Quality Institute to prepare the Program for Evaluating Payment Patterns Electronic Reports, known as “PEPPERs.” PEPPER Reports were introduced for use regarding payment errors tracking to help acute care hospitals. These reports were not produced during the transition to the new system, however they were expected to resume in January 2010 to identify challenging areas for the recovery audit contractors project, as Medicare oversight of potential payment errors, to hone in on these potential error areas.

Also, the change with the most impact on daily hospital operations was probably the need for documenting and billing observation (OBSV) level of care. Payment error reports demonstrated a rate of 26 percent of inappropriate admissions nationwide, suggesting that average percentage of cases should have been classified as OBSV, a level of care that falls under Medicare beneficiaries’ out-patient benefits.

All of these changes in reimbursements gave rise to new processes and operational units like clinical documentation improvement (CDI) establishing new roles for case managers. While some hospitals have select case managers as CDI nurses, others hire or train CDI nurses outside of CM. CDI programs utilize experts who incorporate clinical and coding logic in documentation, and focus on initiating queries to physicians should the documentation not reflect the actual clinical care or consumption of hospital resources.

Another change involved timely notification of patients regarding their care and benefits. This included notices or letters such as: Hospital Issued Notice of Non-coverage (HINN), Important Medicare Message (IM/IMM) notifying patients of their appeal rights, Detailed Notice of Discharge (DND), and Advanced Beneficiary Notice (ABN) that mandated certain elements of patient notification requirements that had to be met and, consequently, process changes created.

Additionally, section 5001(a) of the Deficit Reduction Act of 2005 brought new requirements for hospitals’ quality reporting. The IOM reports were used for these measures that continue to be revised over time and enforced through HCAHPS® mandated reporting that anyone can view online (www.hospitalcompare.com) to compare hospital data on quality measures.

Why Change Protocols?

The answer to the need to change is simple. An example can provide an algorithm as to why: Under an old DRG of 79/80, Respiratory Infections and Inflammation was changed to one of three options under the new MS-DRGs: (a) 177 with major complex condition with an RW of 1.8444, (b) 178 with RW 1.6268 (old) to 1.5636, or (c) 179 without co-morbid or chronic condition where the old RW 0.8943 changed to 1.2754.

To put this in perspective, say the RW of 1.5 for a hospital base pay of $5,000 will bring in a revenue of $7,500. Multiply that number with the number of cases for that MS-DRG and you get the picture for potential lost revenue if accurate documentation is not there. It is worth noting that queries involve radiology reports, labs, nurses’ notes including recovery room, dietitians’ notes, anesthesia, and other services like physical therapy and wound care. Hospitals were given a grace period of two years until full implementation.

As of April 2011 claims under the old system will not be reimbursed by CMS. It is also important to note that Conditions of Participation (CoP) in the Medicare program mandated the use of evidence-based guidelines or criteria for making determinations about appropriate utilization of resources and managing care. Therefore, case and care managers have to be trained to use acceptable criteria for making such determinations concerning appropriateness of inpatient admissions, level of care, and utilization management processes as explicitly listed under these conditions.

Conclusion

The tides are changing and they are changing fast. CM needs to be fiscally responsible while putting the quality of care hat on in order to do what is ethically right and not just for the patient but also for the organization and for the greater good of the society by contributing to health care spending containment efforts.

Furthermore, with all the requirements that are in place, criteria knowledge, time management and communication skills have become critical skills for CM roles. Hospitals need to regard the role of CM with professional courtesy and consideration of CM as a revenue-generating entity. Protocols must be in place to support CM efforts for optimal ROI, and for communicating hospital initiatives to medical staffing and encouraging physicians’ support of these initiatives.
It takes an integrated approach for the delivery of quality, cost-effective care that keeps the pace with, or proactively plans for, absorbing potential shocks of future health care reform initiatives.

Stefany H. Almaden, RN, MS, PHD(c), CCM, CPUM, CMCN, has worked in a variety of settings within the health care industry for over 20 years, and more than 15 years in care management. Stefany is currently managing her consulting business, The Almaden Group (www.almadencare.com), while serving on the Board of Directors with AAMCN and as Chair of the Care and Outcomes Management Committee, setting industry guidelines for care management across the continuum of health care delivery. Stefany is also Co-Chair and member of the Legislative Committee. Her article here discusses case management’s often resilient role in the face of federal legislation.
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